By: FPJ Web Desk | May 18, 2023
If you're planning a vacation abroad, get ready to pay more as you'll now be paying 20% TCS on credit card payments overseas instead of 5% under the Reserve Bank of India's new Liberalised Remittance Scheme.
For instance, if you splurge ₹1 lakh in the malls of Dubai or Singapore, ₹20,000 will be added to your bill as TCS, which can alter your overall budget for the trip.
This could hurt the credit card industry according to Ravisutanjani's tweet, since higher TCS will affect affect the value on foreign spend, by making people rethink their expenses.
Another provision under the LRS is that money sent abroad or spent during a foreign trip will be capped at $2,50,000, and anything beyond that will require a permission from the RBI.
But people paying fees for education abroad or getting treatment in a foreign country, need not worry, as medical and educational expenses are exempted from LRS. But money sent for personal expenses of students will still attract 20% TCS.
The amount charged as TCS can be later claimed while filing income tax returns, but it will definitely have an impact on how often people swipe credit cards on foreign trips.